Average Earnings (Hansard, 12 May 1983)

§ Mr. Younger

The information is set out in the following table.

The objectives have been set in the following terms:

OBJECTIVES FOR THE SCOTTISH ELECTRICITY BOARDS In accordance with their statutory obligations the primary duty of the Boards is to develop and maintain an efficient, coordinated and economic system for the secure supply of electricity to consumers in Scotland. In complying with this and their other statutory duties, there are a number of objectives which the Government wish the Boards to pursue.

1. The Boards must ensure that their operations are carried through with maximum efficiency, paying close and continuing attention to the control and reduction of costs, including the setting of challenging cost control targets, and to the need to achieve the performance aims set by the Government. In this context, the Boards should keep under review the standards of service to which they operate. A plan should also be prepared for the matching of generating capacity (including any excess capacity) with expected demand in such a way that existing assets are used in the most efficient and economic way to minimise costs. In their dealings with suppliers the Boards should also aim to minimise their costs whilst maintaining adequate levels of stock and the security of supply of fuel and ancillary materials.
2. In developing capital investment proposals the Boards' objective should be the supply of electricity at the lowest possible cost consistent with maintaining adequate standards and with the required rate of return on new Investment. The Boards should continue to set out their capital investment proposals comprehensively for approval by the Secretary of State, giving an account of the strategic framework against which these proposals have been developed. The Boards should also continue to pay close attention to the methodology used in appraising their capital investment proposals and this methodology should be agreed with the Scottish Economic Planning Department. Every effort should be made to ensure that all capital projects are completed on time and within budget. In particular, SSEB should ensure that Torness is commissioned successfully on time and within budget and, for their part, NSHEB should take all practicable steps to reduce the cost of diesel generation.
3. The Boards' plans for efficient operation, and cost reducing investment, should be developed in the light of their annual discussions with the Government of a document reviewing the strategic options open to the Boards. This document should be submitted by 31 December each year in advance of the Investment and Financing Review. In preparing their plans, the Boards should aim to meet the financial targets and performance aims agreed with the Government and take full account of their external financing limits. The Boards should ensure regular and effective information flows to assist the Government to monitor performance in relation to those targets and limits.
4. The Boards should, in consultation where appropriate with the Government, develop and promote a framework of electricity pricing principles within which the Boards set their prices so as to reflect the costs at the margin of meeting demand on a continuing basis, and so as to be consistent with the financial framework set by the Government. The Boards should pay careful attention to the costs of supplying different categories of consumers at different times, and the structure of the Boards' tariffs should be assessed against these costs.
5. To increase the scope for competition and ensure the efficient use of resources, the Boards should consider the prospects for the injection of private investment into areas of the Boards' operations and make positive recommendations to the Government wherever possible. The Boards should also seek to develop co-operation with private generators, ensuring that adequate commercial and technical arrangements exist to take full economic advantage of their potential contribution to supply.
6. Subject to objective 5. above, the Boards should seek to ensure that both their contracting and appliance retailing activities are carried out efficiently and economically so as to yield a proper return on the assets employed.
7. The Boards should do all possible to explore and exploit to full potential of nuclear power to contribute to the cheap, effective and safe production of electricity, ensuring the maximum use of the nuclear power capacity presently available to the Boards and that currently under construction.
8. The Boards should also encourage the conservation of electrical energy, the development of renewable sources of electricity, and economic schemes for combined heat and power and the use of surplus heat from power stations having regard, where appropriate, to the financial criteria applied by the Boards in relation to other expenditure.
9. In their dealings with domestic consumers the Boards should comply with the provisions of the Electricity Supply Industry's Code of Practice on Disconnections.
10. The conclusions and recommendations of the recent efficiency audits of both Boards should be discussed with SEPD and arrangements made for the implementation of those recommendations which are accepted. A report on the progress made in implementing these recommendations should be submitted to the Secretary of State before the end of 1984.

Either the Boards or the Government may propose revised or additional objectives from time to time, and any consequent adjustments to existing objectives would be a matter for discussion between the Boards and the Government. The Government may also wish to impose constraints from time to time, for wider reasons, on the Boards' ability to achieve one or other of these objectives.